Change of Character in Market place

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Dear Investor,

There is sudden change in market characteristics. Last post we mentioned about support line holding. As you all already know the support did not hold for many of the stocks. That is a change in character of market place. We have suddenly turned from buyer to net seller. The stocks which nobody wanted to sell and only buy are now being sold at much lower rate but nobody wants them now.

Quick scan at most of the stock show that we have experienced a sort of mini crash in stocks. Most of the stocks have either broken there 150 day support line or have returned very very close to 150 day line. There is too much technical damage in the stocks.

I do not believe that market will suddenly shoot higher from here. We will have to trade in some kind of range before moving higher. Well, This might be the best buy point or may be the best sell point. Its very hard to say that from the chart.

If we carry bullish sentiment then we should be buying at these prices. The only concern to me is that the selling to so much and so much continuous. It means the big players are getting out of stocks. We need to see at least two higher closing within the space of 4 days. Then we could move forward with buying. Right now you should be 70-80% in cash.

The reason what I see is strong dollar. The trend is taking hold and it will force the FII to get out of risky assets like stocks. Since we have broken 50 day support on NIFTY, it better to be out and watch. I have been warning you since Oct 2009 that the time is not good for trading.

Well, here we are now. If market keeps selling then its better to keep raising cash. If we had hold 4750 then we were good placed. Now the situation is changed. 4750 is broken and we will quickly move to 4200. That appears to be the most likely outcome.

The push higher is less likely now. So trade less.

Thanks
Anil



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